HPS closes on $17bn junior capital fund

The fund, which exceeded its $9.5bn equity target, has invested approximately $6bn in subordinated debt in 24 investments.

HPS Investment Partners has closed on its Strategic Investment Partners V, the fifth vintage of its junior capital solutions strategy. The fund focuses on loans to large, established businesses in North America and Western Europe.

SIV V has substantially passed its initial target equity capitalisation of $9.5 billion, closing with $17 billion in investable capital, $12 billion in equity commitments.

In a statement, governing partner and fund portfolio manager Scot French said, “We believe the current market environment presents a rich set of opportunities for us to pursue as companies continue to seek strategic partners and scaled platforms that can develop and execute bespoke financing solutions with speed and certainty.”

This is the final close of a fund that was launched in 2021, with a North America corporate subordinated debt focus. According to a source familiar with the details, the fund had its first close in November of that year.

It has deployed more than one third (37 percent) of its investable capital, totalling approximately $6 billion, towards 24 investments in what it describes as an “array of businesses”.

According to an October 2020 press release, the predecessor fund is known as Mezzanine Partners Fund IV. MPF IV closed in that month with $11 billion in investable capital and $9 billion in equity commitments. Before that, the Mezzanine Partners Fund III had its final close in December 2016 with $6.5 billion in commitments.

HPS, a New York-based firm, was founded in 2007. According to the firm website it was originally known as Highbridge Principal Strategies within JPMorgan Asset Management. It spun out of JPMorgan in 2016. In 2023 it has approximately $100 billion in assets under management.

HPS manages a range of strategies across the capital structure. For example, its funds now in market include, according to Private Debt Investor data, an HPS Specialty Loan Fund IV (senior debt, North America). In June 2022 it closed on a special situations fund, distressed debt, North America. HPS came in third in the PDI annual awards for 2022 fund manager of the year, and first for fund raiser of the year.

Scott Kapnick, the chief executive officer of HPS, said in the firm’s statement that HPS is pleased “to be able to continue building on this track record and [we] are grateful to the investors who have entrusted their capital to our firm”.

Large equity commitments have come from public pension funds, including the South Carolina Retirement System, the Teachers’ Retirement System of Louisiana and the Virginia Retirement System.